Problems affected a multitude of users, some several times; Samsung will off up to $300 USD in reimbursement

It would be fair to say that Samsung's display business has some serious issues.

While Samsung Electronic Comp., Ltd. (KS:005930) outsold its rivals in 2011 in both the flat-panel segment and the 3D-TV sub-segment [source], it also hemorrhaged $900M USD. The company is currently in the midst of spinning off its LCD panel manufacturing TV business -- which ironically it just expanded via buying out a joint stake in its display partnership with Sony Corp. (TYO:6758). The deal is set to wrap up on April 1, creating a new wholly owned subsidiary of the Samsung conglomerate dubbed "Samsung Display Company". The spinoff is expected to unshackle Samsung Electronics from the losses, allowing it to aggressively pursue OLED technology development.

I. Persistent Failures Strike Numerous Samsung TV Buyers

But even aside from the balance sheet, Samsung has serious issues to contend with, despite its sales success. The company has just announced details of a class action settlement with consumers over its use of less-expensive failure-prone capacitors.

The failures were sweeping. DailyTech first covered this issue in an early 2011 piece, after both hearing numerous first hand accounts of failures at CES 2011 and reading yet more accounts of failures on Amazon.com, Inc.'s (AMZN) user reviews section. While anecdotal, these stories painted a disturbing picture.

"Jerry Nichols" writes:

This is my second Samsung purchased from Amazon! The first broke down after six months use and it took the Samsung repairman six weeks to show up to replace one board (less than 15 minutes) and it now works fine.

This time I set the new 3D set up on December 19th and it had a black screen on December 20th. The repairman showed up on December 22. He replaced two boards to no avail. He has now ordered a new front panel, basically a new television to be assembled in my home. It will be sometime after Christmas before the new front panel shows up. In my opinion a new set should have been provided to compensate for the four hours use that we got, and what seems to be an extreme repair in the works!

...

It is December 30th, 10 days since original failure, The service man has been here twice. The first time he place the Main Board, and the Power Board. The set continued with the same problems dark screen and flashing power light. The service man was convinced it was the LCD Panel (Basically the the entire television except the bezel).

The new panel arrived yesterday. I assisted with the installation. Same problem dark screen and flashing power light! The service man went through a series of trouble shooting steps to discover that they think it is a ten dollar cable from the power board to the display board.

Another user, "Maddie57" writes:

I just received the tv about an hour ago. Easy set-up, blah, blah. However, the monitor is NOT working! All there is to see are colored lines. Called the Samsung customer service and Lamar, who assisted me on the phone, said I need to have it serviced---ALREADY! So here I am, off work to receive the tv, and waiting for a call from a local company to come fix my brand new television.
My previous tv was another Samsung which they had to fix three times for the same problem. There is a Samsung warranty to replace the tv if it continues to have an issue after three fixes. What do you know, the warranty lapsed two weeks after the third visit from a service person. Shouldn't that first experience taught me a lesson? Maybe. But the reviews on the product are so good, I can't believe I got another lemon. I mean, lightning is not supposed to strike twice.

And the issues weren't constrained to 2010 -- throughout 2011 many similar problems popped up. "P. Breakfield" writes about a newer set in Sept. 2011:

I have purchased TWO of these tvs. The first one was for myself and it arrived promptly and worked without problem. The picture is excellent and everything is great. The second one was for my in-laws. They saw my tv and wanted one just like it. Upon opening the tv, my wife began putting together accessories while I was putting together the wall mount and she immediately noticed that the remote control was missing the battery cartridge. (The remote has a cartridge that pops out, you put your four AAA batteries in and slide the cartridge back in and you are good to go.) We figured that this was an anomaly that could be taken care of by contacting Amazon, and even though it makes setting up the tv a great deal more tedious, mostly you just turn the tv on and off and use the cable box remote to change channels and the surround sound remote to adjust volume. So we figured that we would be ok until a replacement could be sent. She even noted to me that there was a quality inspection sticker that said "passed" in the wrapper with the remote. Ha!

Then, upon mounting the tv and turning it on, it began emitting a high pitched whine and as soon as the Smart TV screen came up, the tv obviously had horizontal lines streaking through the picture. This was before any inputs had been selected or any components were turned on. I went ahead and went through the setup skipping network setup and just got to the point where I could try the HDTV cable box or the Blu-ray player, and both of them also exhibited the horizontal lines while the tv was whining away at a high pitch.

So, either Samsung was able so send out a tv that was missing the battery cartridge in the remote AND was defective, OR this tv was a return/repair/refurb that was not properly vetted and then sold as new. Either of those two scenarios doesn't bode well for Samsung.

For those of you who get a new/working tv, this is a nice tv with a great picture. But Samsung worries me. I have a 52 inch Samsung that has the capacitor problem that you can do a simple search on google and learn about. The short version is that right at the two year mark, the tvs would take longer and longer to turn on while clicking over and over again. Eventually they wouldn't turn on at all. At first Samsung denied the problem and would do nothing, but eventually the internet caught up with them and everyone was publishing the fix (about a half-dozen cheap capacitors on the power supply board that cost about $10 total to replace) and people even began selling kits to solder them in yourself and finally Samsung admitted there was a problem and started fixing the tvs. That was 5+ years ago and I figured that they had gotten their act together since then, but now I'm not so sure.

Samsung, without a doubt, makes one of the best looking LCD screens out there. They look GREAT. But they seem to have serious issues with quality control and cutting corners on part suppliers that make their tvs a gamble to buy. I am waiting now to see how Amazon is going to handle this. I will report back when I hear from them and follow up on how this is handled.

Amazon's reviews pages were littered with hundreds of similar stories of users who purchased Samsung's expensive LCD sets out to be plagued to with quality issues and poor customer service -- problems that typically traced back to a familiar culprit -- the capacitors on Samsung's circuit boards.

II. Failures Cost Customers Time -- and Money

The failures even affected one of DailyTech's own -- Mark Kurlyandchik -- who penned a subsequent frustrated blog entitled "Why I'll Never Buy Another Samsung Product Again", taking Samsung to task for its well-documented quality control issues and poor customer service.

Some of the problems were reportedly sourced to electrolytic capacitors from firms based in Ching Mai, China [source], but its quite possible that a variety of similar cost-cutting budget components were culprits in other failures, given the diverse kinds of failures afflicting the unfortunate LCD TV owners.

Samsung TVs looked great, but gave users a world of woes when they took them home.
[Image Source: Flickr]

The net result was that owners often would have their sets die at the two year mark -- right when their warranty expired -- leaving them with no recourse, except for paying may have been unaware of Samsung's blanket repair promise, paying for repairs out of pocket. And users contemplating such an approach were surely unsettled by the reports that many such repairs did not fix the victims' problems even after multiple tries and multiple circuit board replacements.

Even users who had their sets die under warranty lost a great deal of time and money, trying to work through Samsung's warranty system.

III. Samsung Finally Agrees to Pay for Its Alleged Cost-Cutting

Finally Samsung has agreed to offer its users some financial relief. Users who paid out-of-pocket repairs costs on certain sets prone to capacitor failures can now seek to get up to $300 USD in compensation. Even users who did not pay for repairs may be eligible to a smaller settlement.

Writes Samsung:

You must fill out and submit this form to obtain reimbursment for:

Expenses you incurred, prior to March 2, 2012, to evaluate or diagnose the capacitor issue covered by the settlement up to $150

Expenses you incurred, prior to March 2, 2012, to fix the capacitor issue covered by the settlement up to $150, or up to $300 if the repair included replacing a power supply board

Shipping expenses, including insurance costs, you incurred, prior to March 2, 2012 to fix the capacitor issue covered by the settlement, up to $150

A $300 fully transferable debit card if you reported to SEA, prior to March 2, 2012 the capacitor issue covered by the settlement, but did not get it fixed and you now no longer posess your television; or

A payment of $50 if, after March 2, 2012, you require more than on repair to fix the capacitor issue covered by the settlement.

In other words, a customer who repaired the set may receive up to $300 USD up to $600 for diagnosis, repairs, and shipping, plus $50 if they need more repairs; while a customer who ditched the set can still receive up to $300, as well $450 for diagnosis and compensation.

The settlement is in direct response to the case Russell, et al. v. Samsung Electronics America, Inc., filed in District Court of Oklahoma County, Case No. CJ-2011-7260. It only applies to U.S. TV purchasers, although similar settlements may be pending in the European Union and elsewhere.

If your TV has had issues, the big question is whether it falls under the described "Capacitor Issue", as Samsung's legal documents put it. The settlement refers to "Covered TV Symptoms", but frustratingly never formally defines these symptoms, as far as we saw in the documents linked in the company's press release. The documents do state that Samsung can determine from its service records whether your issue was one of those symptoms covered in the case, and that it can also perform a "quick" and "free" evaluation if it could not otherwise determine whether your set qualifies.

Humorously, the settlement has a passage demanding that members of the class not contact the media or criticize its failing products. It writes:

The existence and terms of this Settlement Agreement shall be kept confidential until such time as it is presented to the Court for Preliminary Approval. No discussions regarding the Settlement shall be had with the media or on the Internet, including the disparagement of SEA or the description of this Settlement as a recall.
...
SEA does not concede any infirmity or weakness in its defenses or its products.

In other words, while it's complete a settlement for mass defects in its product, a settlement which may cost it millions of dollars, it expects customers to be quite and not criticize it. While not exactly atypical legal language, the comments are pretty funny, nonetheless.

A claim form can be found in the link below.

[Update 1]

A Samsung spokesperson want to make it clear that the company has been repairing/replacing the failed capacitor-plagued TVs of customers under warranty, and that the settlement largely applies to repairs out of warranty (as many of the examples listed mention).

Writes the spokesperson:

Regarding the capacitor issue, since originally confirming this issue in early 2010, Samsung has voluntarily provided free repairs for U.S. customers with affected televisions. Recently, a nationwide class settlement covering all affected televisions in the U.S. was reached in Russell, et al. v. Samsung Electronics America, Inc., a lawsuit filed in the District Court of Oklahoma County in the U.S. Customers who believe they have an affected TV should go to

www.samsung.com/capacitorsettlement, or call 888-899-7602. As the leading supplier of televisions, Samsung remains committed to delivering superior technology and excellent service to our loyal customers.

The spokesperson also wished to make it clear that it was the LCD panel manufacturing business (which includes TV panel production), not the TV sales unit that was being spun off.

[/Update 1]

[Update 2]

A phone conversation with a Samsung spokesperson provided some additional details and clarifications.

First the bad news:
While the settlement line items (diagnosis; repairs; etc.) sound like they would be additive, they are not. Customers who qualify for multiple settlements are entitled to receive one of the payments -- hence the maximum payout is not $650 USD, but actually $300 USD.

Now the good news:
Samsung's spokesperson clarified that all TVs made since 2006 suffering from capacitor issues will be repaired free-of-charge by Samsung, regardless of warranty state. To get started, just call the number listed above. Again, this information wasn't exactly on the settlement page, and many customers on Amazon seemed unaware of it.

But at least we're here to get the good word out.

It's nice to see Samsung fully addressing this issue and offering repairs -- even for customers whose warranties have experied.
[/Update 2]